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Beer and spirits company Constellation Brands, Inc. (STZ) reported Tuesday morning a drop in first-quarter profits as higher grape costs and selling, general and administrative expenses were partially offset by increasing sales.

The world's largest branded wine maker recorded revenue for the quarter ended May 31 of $673.4 million, up 6 percent from $634.8 million in the year prior quarter. Net earnings for the quarter totaled $52.9 million, or 27 cents per share, compared to $72 million, or 38 cents per share, in the year earlier period. On an adjusted basis, which excludes restructuring costs and other one-time items, profits were $73.7 million, or 38 cents per share, versus $76.0 million, or 40 cents per share, in last year's quarter.

Analysts were expecting adjusted earnings of 41 cents per share on revenue of $674.0 million.

The cost of products sold for the quarter increased 8.6 percent to $417.3 million. SG&A costs rose 30 percent from $144.0 million in Q1 last year to $186.5 million in the latest quarter.

Wine and spirit net sales were helped upward by the last year's acquisition of Mark West, which added $14.3 million to the kitty. Wine net sales, which make up the vast majority of total revenue, rose 6 percent to $597.3 million.

"We experienced positive top line results for our U.S. wine and spirits business in the first quarter driven primarily by our Focus Brands including double-digit depletion trends for Rex Goliath, Kim Crawford, Nobilo, SIMI and Black Box," said Rob Sands, president and chief executive at Constellation Brands. The company's Focus brands also include Robert Mondavi and Ravenswood wines.

U.S. domestic Focus brands shipment volumes were up 7.9 percent in the quarter.

The company's comparable basis equity earnings from its 50 percent interest in a Crown Imports joint venture totaled $66 million compared to $61 million for the prior year first quarter. In June, Constellation closed its acquisition of the 50 percent of Crown in didn't already own via a $4.8-billion deal with Anheuser-Busch InBev (BUD) where Constellation got the remaining stake in Crown, Grupo Modelo's U.S. beer business and more.

For first quarter 2014, Crown generated net sales of $762 million, an increase of five percent, and operating income of $134 million, an increase of nine percent.

"The recent closing of our transformational beer acquisition has been a rewarding way to kick off fiscal 2014. This deal positions Constellation within the top ranks of the U.S. beer industry and significantly increases the size and scope of our company," said Sands.

Looking ahead, Constellation revised its full-year 2014 earnings outlook upward to a range of $2.60 - $2.90 per share on an adjusted basis. In fiscal 2013, the company earned $2.19 per share.

The guidance is in line with analyst expectations of $2.82 per share in profits.Shares of STZ closed Monday trading at $53.15, up 2 percent on the day. So far in 2013, shares are ahead 51 percent through Monday's close, but are looking to open lower on Tuesday with the earnings miss.

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